Daily Archives: January 3, 2013

It’s fun to write about the “death of TV” (or flip flop on it, whatever). Why it’s so fun, I’m not sure, but I have a hunch it’s because…

It’s a HUGE industry ($500+B/year if not more)

It’s been utterly untouched by the Internet (so far – a thing that really rankles a lot of people, mostly tech bloggers)

The newspaper and music industries both got trashed, so why not TV too?

It’s controlled by a very small number of extremely powerful and wealthy companies

The aforementioned companies have a perception of (a) greedy profiteering, (b) being dinosaurs, and (c) restricting people from doing whatever they want with content, which also tends to rankle said tech bloggers

Arguments for the death of TV are equally fun to read and fantasize about. They tend to fall into these categories:

“Those Kids Today”:Theory – Kids today like to watch the YouTubes and the Torrents! Kids today don’t like to pay for content. Therefore when kids get older, they will continue to watch YouTube and not pay for content.Reality – To debunk comically: kids today like Play-Doh, Lego’s, Justin Bieber, and eating Mac & Cheese at every meal – none of which hold true when kids become grownups (well, maybe the mac & cheese bit). To debunk more seriously: kids have loads and loads of time on their hands and very little money, so they can spend the time and energy hunting and pecking for free content – something most adults (30+, with kids) just don’t have. Or, it’d be like assuming that because kids like Justin Bieber when they are teenagers they will like equally crappy music in their fifties. Well, that might just happen I guess.

“Cord-Cutting/Shaving/Trimming/Slicing/Thinning/Balding/Receding”:Theory – everybody’s quitting cable! EVERYBODY!Reality – I’m not even going to bother finding the links, but bottom line is this – for every article that shows XX thousand customers quit Cable, if they don’t ALSO INCLUDE the part where XX thousand customers signed up for IPTV, FIOS, Telco’s, or Satellite, you need to utterly ignore the article. After that, there’s not much evidence left. This may change, but that’s just a theory, and one that’s yet to be really substantiated.

“The Great Unbundling/A La Carte/Go Direct to Consumers”:Theory – In the not-too-distant future, you’ll be able to set exactly the lineup you want, and not pay for channels you don’t watch. Or you’ll watch *everything* a la carte, paying as you go. Or channels like HBO will start selling direct to consumers.Reality – This is in utter conflict with how the TV industry actually works and makes money. And since they, you know, like making money, and since shows are, you know, expensive to make, they need to keep making the money. So if channels were to unbundle, they’d instantly get so expensive people wouldn’t be paying for them. Here’s some of my previous thoughts on this same topic.

“Newspapers/Music died!”:Theory – Because of the deaths of other industries, TV will die too, as it’s antiquated, etc.Reality – This is like arguing that because the coal and steel industries in the US shrank, so will the TV industry. Other than being ad-supported, TV and Newspapers are utterly dissimilar (and BTW, the way the ads work for both are exceptionally different). Other than being, well, media, TV and Music are utterly dissimilar. We might as well say the Internet will die soon because it’s just like newspapers.

“Startups! Technology!”:Theory – Some startup will come along and just utterly kill TV in every way.Reality – Yeah, no.

OK, Jeremy, Mr Big Talk Guy, so what could actually happen? Here’s my theory on what could “kill” the TV industry as we know it – it’s “catch up TV”. For those unfamiliar with the term, “catch up TV” (also called “binge viewing” sometimes) is when you watch a show long after it aired, by days/weeks/months/even years. Whether it’s via Hulu, Netflix, Amazon, iTunes, Video On Demand, or any other service, it’s the rapidly increasing trend on TV consumption. And it’s the one thing the TV industry is massively enabling, and could massively come back to haunt them.

In a nutshell, the TV ecosystem is like a big food chain, with advertising dollars acting at the bottom of it all (yes, TV ads are the kelp of the TV world). Should advertising falter in a notable way (which, by the way, it isn’t at present), it could bring down the whole system. There are several exceptions to the system, such as HBO, but the numbers there ($1.2B) are literally paltry when compared to TV ads ($90B). And catch-up TV represents a problem, as it’s not monetized the same way as live TV. See the Live TV part is where almost all of the $90B of TV ad revenue comes from – hence why ratings declines cause shows to get cancelled, as they don’t generate the cash flow to sustain themselves.

So as we all get further and further accustomed to being able to watch shows whenever we want, we (collectively) are reinforcing the habit of “why bother watch live?” For example, my friends all tell me to watch Homeland, but I don’t really have the time for a new show right now, so I’ve bookmarked it for later (ahem, NextGuide), and will just start watching it on Netflix. Along with Breaking Bad, Mad Men, and lots of other shows I know are great, but just haven’t watched – yet.

What, then, happens to highly anticipated shows that launch, combined with audiences who increasingly choose to wait to view them? They get cancelled (great thoughts on this by Andrew Wallenstein here). Sure a startup like mine can benefit from this, and even become a fabled Billion Dollar Company (FTW!), but success beyond our wildest dreams will, in no way, replace the lost revenue the entire ecosystem would suffer. And just as environmentalists are concerned about loss at the bottom of our food chain, if the TV ad system begins to crumble, then so do budgets for new shows, etc. It ain’t pretty.

Now I’m not predicting the above will all happen – but at the current pace of things, it wouldn’t shock me to see much of it play out. The TV industry is giving its content away way too cheaply to all the providers to sustain itself without the advertising, and they are effectively disincenting viewers from the live experience (not that it’s not cool to get a sticker or a badge or something, but let’s face it, people are smarter than that – hence the general “meh” of most of the social TV offerings – sorry guys, but #come #on), other than for appointment TV programming. Further, it has a certain prisoner’s dilemma aspect to it all, as no single network can make the bold move to pull recent content from the variety of catch-up/streaming services – oftentimes their own apps! From the discussions I’ve had with TV execs, there’s a lot of awareness and a growing concern, but no solutions in sight yet. But, at least it’s the enemy we know…

About

Jeremy Toeman is VP Products for CNET. He has over 15 years experience in the convergence of digital media, mobile entertainment, social entertainment, smart TV and consumer technology. Prior ventures and projects include Viggle, Dijit Media, Sling Media, VUDU, Clicker, DivX, Rovi, Mediabolic, Boxee, and many other consumer technology companies. This blog represents nothing but his personal opinion and outlook on things.